Reg Jones Expert's View

Over the last four weeks I’ve been writing about early retirements and buyouts, largely spurred by employee concerns that cuts in agency budgets not only will result in staff reductions but may lead to reductions in retirement benefits. Because not everyone who wants to leave government will receive an offer of early retirement or a buyout, I thought it would be a good idea to review two other options that are available for those who want to cut and run.

Deferred Annuity

The first option is the deferred annuity. You are entitled to one if you leave government before being eligible to retire on an immediate annuity, have at least five years of creditable civilian service, and don’t take a refund of your retirement contributions.

Under CSRS rules, you’d be eligible for a deferred annuity at age 62. Under FERS rules, there are a range of times when you’d be eligible for a deferred annuity: 62 with 5 years of creditable service, 60 with 20, at your minimum retirement age (MRA) with 30 or at your MRA with 10, with a 5 percent reduction for every year you are under age 62 (5/12 percent per month), unless you have at least 20 years of service and your annuity begins at age 60 or later. MRAs range between 55 and 57, depending on your year of birth. Currently it’s 56.

Deferred annuities are calculated using the standard CSRS and FERS formulas, with your years of service and high-3 being the ones you had on the day you left government:


0.015 x your highest three years of average salary x 5 years of creditable service, plus

0.0175 x your high-3 x 5 years of service, plus

0.02 x your high-3 x all remaining year of service


0.01 x your high-3 x years of service.

Note: The first multiplier is changed to 0.011 if your annuity begins at age 62 with at least 20 years of FERS service.

Under both CSRS and FERS, as a deferred retiree you’d begin receiving annual cost-of-living adjustments beginning at age 62.

Unlike a FERS employee who retires on an immediate annuity, you aren’t eligible to receive the special retirement supplement, which approximates the Social Security benefit earned while covered by FERS.

Neither CSRS nor FERS deferred retirees are eligible to reenroll in the Federal Employees Health Benefits or Federal Employees’ Group Life Insurance programs

Postponed Annuity

The second option is the postponed annuity, which is only available to FERS employees. If you retire under the MRA+10 provision of law you can postpone the receipt of your annuity to a later date to reduce or eliminate the 5 percent age penalty mentioned above.

Your annuity will be calculated using the standard FERS formula and based on your years of service and high-3 on the day you retire. And that’s the amount you’ll receive when your annuity finally begins, minus any portion of the age penalty that remains.

If you were enrolled in the FEHB or FEGLI programs for the five consecutive years before you retired, when your annuity begins, you can reenroll in either or both of those programs. You also can reenroll in the FEDVIP vision-dental insurance program with no five-year requirement.

Early retirement, buyout, deferred annuity, postponed annuity? That’s a lot of possible choices. On the other hand, there’s one more. Hunker down, stay on the job, and hope for the best.